LightSquared offers up $3B reorganization plan

LightSquared’s path to redemption continues, as the spectrum license holder and satellite communications provider announced a $3 billion restructuring plan.
According to The Wall Street Journal, the plan would give Cerebus Capital Management, Fortress Investment Group and J.P. Morgan Chase control over 74% of the operations. Harbinger Capital Partners, which is run by current Philip Falcone, would control 12.5% of the newly funded company. Falcone recently resigned his position on LightSquared’s board of directors.
The new funds would include $1.75 billion coming from the three investment firms, and an additional $1.3 billion coming from the debt markets. Current LightSquared debt holder Charlie Ergen, who is chairman of Dish Network, would reportedly be paid $470 million in cash for his holdings and would receive a $492 million unsecured note.
A judged earlier this year rejected a previous reorganization plan noting it was not fair to Ergen, who has tried to acquire control of LightSquared by gobbling up the company’s debt.
LightSquared filed for Chapter 11 bankruptcy protection in 2012, after the firm was prevented from tapping into its 1.6 GHz spectrum holdings to offer terrestrial wireless services. Regulators cited potential interference concerns with some ground-based GPS systems for denying access, which came after the Federal Communications Commission had given LightSquared provisional approval to use its licenses.
LightSquared has since offered to only use a portion of its total spectrum holdings in order to get around interference issues, a course of action that some say could set a dangerous precedent going forward as the interference issues are being caused by GPS devices that lack sufficient filters to prevent their bleeding into LightSquared’s licensed holdings.
“GPS thinks they came out of the LightSquared issue emboldened and are now asking for floor limits in AWS-3,” noted Tom Dombrowsky, an engineering consultant with Wiley Rein at a recent Silicon Flatirons event in reference to FCC plans to auction spectrum in the 1.7 GHz band.
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